onomic Survey 2025–26: Sustaining High Growth Amid Global Fragmentation

Why in News ?

The Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman, tabled the Economic Survey 2025–26 in Parliament on 29 January 2026. The Survey presents a comprehensive assessment of India’s macroeconomic performance, sectoral trends, structural reforms, and future outlook.

State of the Economy: Growth with Resilience

• Growth Projections:
  • First Advance Estimates project real GDP growth at 7.4% and GVA growth at 7.3% in FY26.
  • Potential growth for India is estimated at around 7%, while FY27 growth is projected at 6.8–7.2%.
• Demand-Side Trends:
  • Private Final Consumption Expenditure (PFCE) grew by 7.0% in FY26, reaching 61.5% of GDP, the highest since 2012.
  • Growth supported by low inflation, stable employment, and rising real purchasing power.
  • Strong agricultural performance boosted rural demand, while urban consumption improved due to tax rationalisation.
• Investment Activity:
  • Gross Fixed Capital Formation (GFCF) grew by 7.8% and remained at 30% of GDP, driven by public capex and revival in private investment.
• Supply-Side Performance:
  • Services sector remains the main growth driver, with GVA growth of 9.3% in H1 FY26 and 9.1% estimated for the full year.

Fiscal Developments: Anchoring Stability Through Credible Consolidation

• Revenue Performance:
  • Centre’s revenue receipts rose to 9.2% of GDP in FY25 (PA), up from 8.5% in FY16–FY20.
  • Non-corporate tax collections increased from 2.4% of GDP pre-pandemic to 3.3% post-pandemic.
• Tax Base Expansion:
  • Income tax return filings increased from 6.9 crore in FY22 to 9.2 crore in FY25, reflecting improved compliance and digital administration.
• GST Collections:
  • Gross GST collections during April–December 2025 stood at ₹17.4 lakh crore, growing 6.7% YoY.
  • E-way bill volumes rose 21% YoY, indicating robust transaction activity.
• Capital Expenditure:
  • Effective central government capex rose to 4% of GDP in FY25, from 2.7% pre-pandemic.
  • Under Special Assistance to States for Capital Expenditure (SASCI), states maintained capex at around 2.4% of GDP.
• Debt and Deficit:
  • Combined state fiscal deficit edged up to 3.2% of GDP in FY25.
  • India reduced its general government debt-to-GDP ratio by 7.1 percentage points since 2020, while sustaining high public investment.

Monetary Management and Financial Intermediation

Banking Sector Performance

• Asset Quality:
  • Gross Non-Performing Assets (GNPAs) reached a multi-decadal low of 2.2% in September 2025.
  • Net NPA ratio stood at 0.5%, a record low.
• Credit Growth:
  • Outstanding credit grew 14.5% YoY as of December 2025, compared to 11.2% in December 2024.

Financial Inclusion

• PM Jan Dhan Yojana (PMJDY):
  • 55.02 crore bank accounts opened as of March 2025, with 36.63 crore in rural and semi-urban areas.
• Key Schemes:
  • Stand-Up India: Loans of ₹10 lakh–₹1 crore for SC, ST, and women entrepreneurs.
  • PM SVANidhi: Collateral-free loans to street vendors.
  • PM Mudra Yojana: Over ₹36.18 lakh crore disbursed across 55.45 crore loan accounts by October 2025.

Capital Markets and Financial Ecosystem

• Investor Base:
  • Demat accounts crossed 21.6 crore, with 12 crore unique investors by September 2025—nearly 25% women.
  • Mutual fund industry reached 5.9 crore unique investors, with strong participation from non-tier-I and tier-II cities.
• International Validation:
  • IMF–World Bank FSAP 2025 highlighted India’s resilient and diversified financial system, with total financial sector assets at 187% of GDP (CY 2024).

External Sector: Playing the Long Game

• Trade Performance:
  • India’s share of global merchandise exports nearly doubled from 1% (2005) to 1.8% (2024).
  • Share of global services exports rose from 2% to 4.3% over the same period.
• Exports and Remittances:
  • Total exports reached USD 825.3 billion in FY25, growing 6.1% YoY.
  • Services exports hit an all-time high of USD 387.6 billion, growing 13.6%.
  • India remained the world’s largest recipient of remittances, with inflows of USD 135.4 billion in FY25.
• Current Account and Reserves:
  • Current Account Deficit (CAD) remained moderate at around 1.3% of GDP in Q2 FY26.
  • Foreign exchange reserves rose to USD 701.4 billion (16 January 2026), covering 11 months of imports and 94% of external debt.
• FDI Inflows:
  • Gross FDI inflows reached USD 64.7 billion during April–November 2025.
  • India ranked fourth globally in Greenfield investment announcements in 2024 and emerged as the largest destination for Greenfield digital investments (2020–24).

Inflation: Tamed and Anchored

• Headline Inflation:
  • Average CPI inflation during April–December 2025 stood at 1.7%, the lowest since the CPI series began.
  • Decline driven by moderation in food and fuel prices, which together account for 52.7% of the CPI basket.
• Global Comparison:
  • India recorded one of the sharpest declines in inflation among EMDEs, with a reduction of 1.8 percentage points in 2025 over 2024.

Agriculture and Food Management

• Production Trends:
  • Foodgrain production reached 3,577.3 lakh metric tonnes (LMT) in AY 2024–25, an increase of 254.3 LMT over the previous year.
  • Growth driven by rice, wheat, maize, and coarse cereals (Shree Anna).
• Diversification:
  • Horticulture, accounting for 33% of agricultural GVA, reached 362.08 million tonnes, surpassing foodgrain output.
• Marketing and Infrastructure:
  • e-NAM onboarded 1.79 crore farmers, 2.72 crore traders, and 4,698 FPOs, covering 1,522 mandis across 23 states and 4 UTs.
  • Agriculture Infrastructure Fund (AIF) and ISAM strengthened farm-gate facilities.
• Income Support:
  • Over ₹4.09 lakh crore released under PM-KISAN since inception.
  • PM Kisan Maandhan Yojana (PMKMY) enrolled 24.92 lakh farmers as of December 2025.

Services: From Stability to New Frontiers

• Contribution to GDP:
  • Services’ share in GDP rose to 53.6% in H1 FY26; GVA share reached 56.4%, the highest ever.
• Global Position:
  • India is the world’s seventh-largest exporter of services, with its global share rising to 4.3%.
• FDI Magnet:
  • Services accounted for 80.2% of total FDI during FY23–FY25.

Industry’s Next Leap: Structural Transformation and Global Integration

• Industrial Growth:
  • Industry GVA grew 7.0% in H1 FY26.
• Manufacturing Revival:
  • Manufacturing GVA grew 7.72% in Q1 and 9.13% in Q2 FY26, reflecting structural recovery.
• PLI Schemes:
  • Across 14 sectors, PLI attracted over ₹2.0 lakh crore of actual investment, generating incremental production/sales of ₹18.7 lakh crore and over 12.6 lakh jobs.
• Innovation and Semiconductors:
  • India’s Global Innovation Index rank improved to 38th (2025) from 66th (2019).
  • India Semiconductor Mission approved 10 projects with investments of ₹1.60 lakh crore.

Investment and Infrastructure: Strengthening Connectivity and Competitiveness

• Capital Expenditure:
  • Government capex increased nearly 4.2 times, from ₹2.63 lakh crore (FY18) to ₹11.21 lakh crore (FY26 BE).
  • Effective capex in FY26 (BE) stands at ₹15.48 lakh crore.
• Transport Infrastructure:
  • National Highway network expanded by 60%, reaching 1,46,572 km (FY26 up to December).
  • High-speed corridors increased nearly ten-fold from 550 km (FY14) to 5,364 km.
  • Rail network reached 69,439 route km, with 99.1% electrification by October 2025.
• Aviation and Power:
  • India is the world’s third-largest domestic aviation market, with airports increasing from 74 (2014) to 164 (2025).
  • Installed power capacity reached 509.74 GW, with renewable energy forming 49.83% of total capacity.
• Power Sector Reforms:
  • DISCOMs recorded a positive PAT of ₹2,701 crore in FY25, a historic first.
  • AT&C losses reduced from 22.62% (FY14) to 15.04% (FY25).
• Digital and Water Infrastructure:
  • Tele-density reached 86.76%, and 5G services cover 99.9% of districts.
  • Over 81% of rural households have access to clean tap water under the Jal Jeevan Mission.
• Space Sector:
  • India became the fourth nation to achieve autonomous satellite docking (SpaDeX).

Environment and Climate Change

• During FY26 (up to 31 December 2025), 38.61 GW of renewable energy capacity was added, including:
  • 30.16 GW solar,
  • 4.47 GW wind,
  • 3.24 GW hydro, and
  • 0.03 GW bio-power.

Education and Health: What Works and What’s Next

Education

• School Education:
  • India serves 24.69 crore students across 14.71 lakh schools, supported by 1.01 crore teachers.
  • Gross Enrolment Ratios (GER):
    • Primary: 90.9%
    • Upper Primary: 90.3%
    • Secondary: 78.7%
    • Higher Secondary: 58.4%
• Higher Education:
  • Higher education institutions increased from 51,534 (2014–15) to 70,018 (June 2025).
  • India now has 23 IITs, 21 IIMs, and 20 AIIMS, plus international IIT campuses in Zanzibar and Abu Dhabi.
  • National Credit Framework (NCrF) adopted by 170 universities.
  • Academic Bank of Credit covers 2,660 institutions, with over 4.6 crore IDs issued.

Health

• Mortality Reduction:
  • Since 1990, India reduced:
    • Maternal Mortality Rate (MMR) by 86%,
    • Under-Five Mortality Rate (U5MR) by 78%,
    • Neonatal Mortality Rate (NMR) by 70%.
  • Infant Mortality Rate declined from 40 (2013) to 25 (2023).

Employment and Skill Development: Getting Skilling Right

• Employment Trends:
  • 56.2 crore people (aged 15+) were employed in Q2 FY26, with 8.7 lakh new jobs added over Q1 FY26.
  • Organised manufacturing employment grew 6% YoY in FY24, adding over 10 lakh jobs.
• Labour Reforms:
  • Labour Codes formally recognised gig and platform workers, expanding social security and benefit portability.
• Unorganised Workers:
  • e-Shram portal registered over 31 crore workers, with 54% women.
• National Career Service (NCS):
  • Over 5.9 crore registered job seekers, 5.3 million job providers, and mobilisation of 80 million vacancies.
• Skill Ecosystem:
  • National Scheme for Upgradation of ITIs aims to upgrade 1,000 government ITIs through modern infrastructure and industry-aligned courses.

Rural Development and Social Progress

• Poverty Reduction:
  • As per NITI Aayog’s Multidimensional Poverty Index (MPI), poverty declined from 55.3% (2005–06) to 11.28% (2022–23).
  • World Bank revised poverty line to USD 3/day (2021 PPP); India’s poverty rates in 2022–23 stood at 5.3% (extreme) and 23.9% (lower-middle-income).
• Social Services Expenditure:
  • Social services expenditure rose to 7.9% of GDP in FY26 (BE).
• SVAMITVA and Rural Technology:
  • Drone surveys completed in 3.28 lakh villages.
  • 2.76 crore property cards issued.
  • Over 1,094 drones distributed to SHG Drone Didis, including 500 under Namo Drone Didi Scheme.

Evolution of the AI Ecosystem in India

• The Survey emphasises smaller, task-specific AI models tailored to India’s low-resource and diverse settings.
• AI demand is driven by real-world needs across healthcare, agriculture, urban management, education, disaster preparedness, and governance, promoting inclusive and decentralised innovation.

Urbanisation: Making India’s Cities Work

• Initiatives like the Namo Bharat Regional Rapid Transit System (RRTS) are reshaping urban and peri-urban labour markets by reducing travel times, supporting polycentric growth, and easing pressure on metropolitan cores.

From Import Substitution to Strategic Resilience and Strategic Indispensability

The Survey proposes a disciplined Swadeshi approach through a three-tiered framework:

1. Critical vulnerabilities with high strategic urgency.
2. Economically feasible capabilities with strategic payoffs.
3. Low-urgency or high-cost substitutions to be deprioritised.

It advocates:

• A National Input Cost Reduction Strategy treating competitiveness as infrastructure.
• A progression from Swadeshi → Strategic Resilience → Strategic Indispensability, aiming to embed India deeply in global value chains so that “buying Indian” becomes the natural choice.